This paper develops and tests a model of variations in local economic policies. The influence of unemployment, financial resources and party politics on economic development expenditures is estimated empirically in the London Boroughs. The statistical evidence indicates that the model provides a satisfactory explanation of inter-borough differences in economic policies and that the impact of party political and local tax-base variables is particularly important. The implications of the results for central policies towards local economic development and for analyses of local policy variation are discussed.
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